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Britain's Cameron says no turning back on deficit reduction plan

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(Globalpost/GlobalPost)

By Andrew Osborn

LONDON, March 7 (Reuters) - British Prime Minister David Cameron will promise on Thursday to stick to his government's deficit reduction plan despite the loss of his country's top-notch AAA credit rating, saying Britain would plunge "back into the abyss" if he changed course.

Speaking ahead of a March 20 budget that will be dissected by the markets and ratings agencies alike, Cameron said there were signs his government's economic policies were beginning to work and that it was imperative to "hold firm to the path".

"The decisions we make now will set the course of our economic future for years to come," he will tell an audience in Yorkshire, northern England. "And while some would falter and plunge us back into the abyss we will stick to the course."

The state of Britain's anaemic economy is linked to Cameron's own political fortunes.

His advisers are banking that an economic recovery will be underway by the time of the next general election in 2015, allowing Cameron to whittle away the opposition Labour party's lead in the opinion polls and win.

But for now the economy appears stuck in a rut and could already be in its third recession since 2008, while public debt is set to carry on rising for another three years despite some public spending cuts.

"LONG HARD ROAD"

However, Cameron will tell his audience he has cut the country's deficit by a quarter, interest rates are at a record low, exports are reviving, the number of people on welfare has fallen, and there are more people in work "than ever before in our history".

"Of course, these signs of progress are just the beginning of a long hard road to a better Britain," he will say.

"But the very moment when we're just getting some signs that we can turn our economy round and make out country a success ... is the very moment to hold firm to the path we have set."

Labour often accuses him of inflicting pain on millions of families across the country with his austerity-drive, but Cameron will say his policies are necessary to give people better living standards in the long-term.

Britain suffered its first-ever sovereign ratings downgrade from a major agency last month, after Moody's stripped the country of its triple-A rating, blaming weak prospects for the economy, and Cameron is under mounting pressure to show he can deliver growth.

The Labour party says Cameron's determination to stick to austerity is killing off any chances of that happening, while some members of his junior coalition partner - the Liberal Democrats - have publicly questioned his focus on cutting debt.

Cameron's speech, which he is expected to deliver at around 1200 GMT, coincides with an announcement from telecoms provider BT that it is creating 1,000 new jobs.

http://www.globalpost.com/dispatch/news/thomson-reuters/130306/britains-cameron-says-no-turning-back-deficit-reduction-plan